Contango Holdings PLC Production Commences: Lubu Coking Coal Project (4469G)
30 March 2022 - 5:00PM
UK Regulatory
TIDMCGO
RNS Number : 4469G
Contango Holdings PLC
30 March 2022
Contango Holdings Plc / Index: LSE / Epic: CGO / Sector: Natural
Resources
30 March 2022
Contango Holdings Plc
('Contango' or the 'Company')
Production Commences at the Lubu Coking Coal Project
Contango Holdings Plc, the London listed natural resource
development company developing the Lubu Coking Coal Project in
Zimbabwe ('Lubu') and the Garalo-Ntiela Gold Project in Mali
('Garalo-Ntiela'), is pleased to confirm that production commenced
at the Lubu site on 29 March 2022.
Production is underway on Block 2, which was selected given the
high-quality coking coal found at that location and its proximity
to surface. Studies have defined an estimated 96Mt of coking coal
within Block 2, which forms part of the broader Lubu complex, where
an estimated 1.25 billion tonne Indicated and Inferred resource has
been identified to NI 43-101 levels.
The Company is targeting an initial stabilised mining rate of
5,000 tonnes per month. As previously reported, Contango will
stockpile production during Q2 2022 pending the installation of the
wash plant in the same period, thereby providing sufficient
feedstock to ensure continuity of supply. Work continues to prepare
the site for the installation of the crushing unit, wash plant and
associated infrastructure. Following the installation of the wash
plant the Company expects to sell washed coking coal to regional
buyers as well as exporting to South Africa, where the Company has
held recent discussions with interested parties.
Later in 2022 Contango expects to be able to capture the full
value for its product by subsequently manufacturing coke at site
for use in the steel and ferro-alloy industries. An initial smaller
scale coke battery of 36,000 tonnes per annum has been sourced and
a larger coke battery of 150,000 tonnes per annum is expected to be
installed towards year end. Whilst sales prices are subject to
offtake and future global pricing, the Company is confident that
margins in excess of US$300/tonne should be achievable based on
ongoing discussions with potential off-takers.
Carl Esprey, CEO of Contango, commented:
"Bringing our first asset into production is a milestone event
for Contango. I would like to thank our in-country team for their
efforts in helping us accomplish this important achievement. The
resource at Lubu is significant and we are now finally in a
position to start to receive the economic benefits. Coking coal and
coke have suffered from significant under-investment and mine
closures in recent years and this, coupled with global
infrastructure projects and transition towards green energy, have
led to a significant uptick in the commodity prices of both coking
call and coke. Accordingly, Lubu has come into production at a time
of substantial demand for our products and limited supply.
"I have spent much of the second half of this month in South
Africa and Zimbabwe and been able to meet potential off-takers. The
demand is clear and with production start-up risk now drastically
reduced I would anticipate being in a position to enter offtake
contracts in the near term. As previously reported, we believe
there is a good possibility any offtake contracts entered into for
coking coal or coke would come with some form of funding, to be
utilised in the roll out of the Lubu development."
**ENDS**
For further information, please visit
www.contango-holdings-plc.co.uk or contact:
Contango Holdings plc E: contango@stbridespartners.co.uk
Chief Executive Officer
Carl Esprey
Tavira Securities Limited T: +44 (0)20 7100 5100
Financial Adviser & Broker
Jonathan Evans
St Brides Partners Ltd T: +44 (0)20 7236 1177
Financial PR & Investor Relations
Susie Geliher / Charlotte Page
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END
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